Far fewer hotels in San Diego County are going into default, a sign of a recovering industry buoyed by rising occupancies and stronger profits, says a new report released Tuesday.

In the second quarter of this year, only two hotels received notices of default, compared to eight a year earlier, according to Atlas Hospitality Group, which tracks distressed hotels throughout the state.

In all, 16 San Diego County hotels were identified as being in default at some point during the second quarter, compared to 40 during the same period in 2010, a decline of 60 percent, Atlas reported.

Meanwhile, the number of lender-owned hotels rose from 6 to 20, although only one hotel -- the 141-room Lake San Marcos Resort -- was foreclosed on during the second quarter, said Alan Reay, owner of Atlas Hospitality.